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“Minority Report” Banking: The Future of Payment Systems

In the 2002 Spielberg film “Minority Report,” erstwhile protagonist Tom Cruise wanders through a future filled with eye-scanning technology that helps merchants “know” who he is and alters their advertising messages accordingly.  Of course, anyone who has watched this film knows that is exactly what he doesn’t want, since he’s on the run from the police.  Tom’s character finds a way around this technology (in a gruesome way that makes me queasy thinking about sandwiches and milk to this day), but the idea of personalizing service and providing positive identification for payments and other transactions is intriguing.

While not currently a capability of today’s retailers, geo-fencing and other mobile technologies offer the next best thing to Spielberg’s vision of the future.  Mobile-carrying consumers can shop, pay and be offered intelligent specials using a combination of GPS and other applications. Savvy retailers using these available technologies can offer a much more intimate experience, fending off the massive online retail giants who hope to make in-store experiences simply showrooms for their operations. GfK’s FutureBuy report offers insights into the various segments, and highlights how their preferences dictate different buying and shopping patterns.

Anyone who has attended a fall festival or art fair and has offered to pay a merchant with a credit card has likely seen Square, the new payment system technology that allows merchants to accept credit cards, obtain customer signatures and email receipts, all from a mobile application and a simple piece of hardware inserted into the phone itself.  The idea, using a mobile phone’s ability to connect with a merchant network to facilitate payments anywhere, has hugely democratized the card payment landscape.  Allowing nearly any retailer to offer access to card payment systems is clearly a win for the retailers, but this also boasts significant benefits for consumers, as well.  The FutureBuy report describes the Xtreme Shopper, a segment of tech-savvy, competitive shoppers who love the idea of finding great deals across shopping channels.

The latest development in these payment technologies doesn’t even require a hardware interface to operate.  Flint, a private equity-backed technology company, has developed an application that uses the mobile phone’s camera to transact card payments.  The system is forehead-smackingly simple:  The merchant takes the card, turns on the app, and scans the front of the card with the camera.  The Flint application lines up the numbers within the app, and with a few button pushes, the transaction is underway.  No information is stored on the merchant’s device, so customers won’t have to worry about fraudulent charges later, and the merchant can use a device most people already have: a camera-equipped mobile phone.

Just think how an Xtreme Shopper might react to having true “buy-anywhere” capabilities combined with better privacy and security for their personal financial information.  While not a retina scanning device, payment advances like Flint are moving us further into a Spielberg-envisioned future where mobile devices are the only item you need in your wallet.

What other payment advances have you heard about? How do you think consumers will respond to this new hardwareless payment technology?

Eric Levy is a Senior Vice President, Financial Services Consulting for GfK Custom Research. You can contact him at eric.levy@gfk.com.

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